What is the 'Effective Date' referring to in the Chem-Dry Equipment Sales and Security Agreement?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
WITNESS WHEREOF, each of the undersigned has affixed his or her signature on the same day and year as the Agreement was executed.
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EXHIBIT B TO FRANCHISE AGREEMENT
EQUIPMENT SALES AND SECURITY AGREEMENT
This Agreement is made and entered into as of The Effective Date by and between Franchisee and CDI, and relates to the Franchise Agreement between Franchisee and CDI for Franchisee's operation of a Chem-Dry® Carpet Cleaning business franchise (the "Business"). In consideration of the mutual promises and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which the parties mutually acknowledge, the parties mutually agree and intend to be legally bound as follows:
EQUIPMENT PURCHASE. Franchisee agrees to purchase from CDI and CDI agrees to sell to Franchisee the tangible equipment listed on the Summary Page on the payment terms set forth in the Schedule.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, the Effective Date in the context of the Equipment Sales and Security Agreement refers to the date when the agreement between the franchisee and CDI (Chem-Dry, Inc.) comes into force. The agreement itself is "made and entered into as of The Effective Date by and between Franchisee and CDI".
This date is significant because it marks the commencement of the legal obligations and rights outlined in the agreement. For instance, it determines when the franchisee is obligated to purchase equipment from Chem-Dry, and it also relates to the security interest Chem-Dry retains in that equipment until it is fully paid for. The franchisee's representations made during the application process are warranted to be true as of this Effective Date.
Furthermore, the Effective Date also plays a role in defining the term of the franchise agreement itself. The franchise term begins on the Effective Date and extends for five years from the Payment Start Date, or in the case of a transfer or renewal, five years from the Effective Date. Therefore, understanding the Effective Date is crucial for a Chem-Dry franchisee as it sets the timeline for various contractual obligations and the overall franchise term.